Drug Manufacturers Accused Of Engaging In Product-Hopping

Reckitt Benckiser, Inc. (Reckitt), a British multinational drug manufacturer, has been sued in a lawsuit involving a prescription drug used for maintenance treatment of opioid dependence. The suit was filed by direct purchasers of the drug and by end payors. The drug, known as Suboxone, is the only pharmaceutical on the market that provides maintenance treatment for patients suffering from opioid addiction that can also be prescribed in an office setting for the patient’s home use. One of the primary issues at the center of this multidistrict litigation is whether a pharmaceutical company marketing brand-name prescription drugs can be subject to antitrust liability for engaging in what has been referred to as a “product hopping scheme.”

“Product hopping” is a tactic by which brand name pharmaceutical companies can try to obstruct generic competitors and preserve monopoly profits on a patented drug by making modest reformulations that offer little or no therapeutic advantages. Prior to facing generic competition, a brand drug company can, for example, simply withdraw its original product, forcing consumers to switch to the reformulated brand drug and enabling the branded company to keep its market exclusivity and preventing consumers from obtaining the benefits of generic competition.

The Plaintiffs alleged in their lawsuit that when the period of exclusivity on brand-name Suboxone expired and generic versions of that drug were to become available, Reckitt effectuated inconsequential changes to the Suboxone dosage form to prevent competition from generic formulations. More specifically, Plaintiffs claim that Reckitt and its affiliates switched from sublingual Suboxone tablets to a sublingual Suboxone film for the purpose of stymying generic competition. This switch was allegedly accompanied by Reckitt falsely disparaging the tablet through fabricated safety concerns and ultimately removing Suboxone tablets from the market just as generic Suboxone tablets were able to begin competing. Reckitt is also alleged to have manipulated FDA regulations to delay the entry of generic Suboxone into the market, thereby unlawfully maintaining a monopoly in violation of § 2 of the Sherman Act and state law. According to the Plaintiffs, Reckitt’s conduct negatively affected competition and resulted in ongoing overpayments by consumers.

In late 2014, these product-hopping allegations survived a motion to dismiss in the United States District Court for the Eastern District of Pennsylvania. In denying the motion, U.S. District Judge Mitchell Goldberg concluded that the Plaintiffs had enough to move forward with their claims in part because they alleged that Reckitt paired its introduction of the reformulated product with sufficiently “coercive” measures that limited consumer choice. These allegations have also sparked an investigation by the Federal Trade Commission.

Last month, Indivior, Inc., a specialty pharmaceuticals operation formed by Reckitt in 2014, urged a Pennsylvania federal judge to force drug wholesalers and others who claim the companies used a “product-hopping scheme” to stifle generic competition to Suboxone to turn over information about downstream sales of the opiate addiction treatment. Specifically, Indivior said it needed information about why patients, physicians, insurers and pharmacies made the choices they did with regard to the two versions of the drug to explain why the film version has continued to outsell generic Suboxone tablets.

Antitrust cases based on pharmaceutical product hopping are relatively new and Beasley Allen has been actively following these cases nationwide. If you have any cases involving product hopping, antitrust, or fraud, please contact Ali Hawthorne, a lawyer in our Consumer Fraud and Commercial Litigation Section, at 800-898-2034 or by email at Alison.Hawthorne@beasleyallen.com.